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You are a marketing director for a Mexican Taco Restaurant located in Lynchburg, VA. The average order size of your customers is $7.00 per order. That means that when all your food orders are divided by your total number of customers, the average order amount is $7.00.
Your Role/Assignment
Your variable cost per order is $3.00 in food costs and paper products. Of course, there are also fixed costs (whether you sell one or a hundred). These include your building lease ($2,000 per month, electricity $500 per month, and labor $3,100 per month).
Using this formula, what is the break-even point? In other words, how many meals, at $7.00, would need to be sold before you start making a profit?
Breakeven Point (number of meals) = Fixed Costs/(Average Order Price – Average Order Cost).
The problem is that, even after being in business for a year, your restaurant is selling slightly less than 1,000 meals. There are several actions that can be taken to reach your break-even point, which is necessary if you are to remain in business. As the marketing director is responsible for the product, price, promotion, and placement, you control many of the tools to make necessary adjustments.
| Category | Points | % | Description |
|---|---|---|---|
| Documentation and Formatting | 2.5 | 5 | Quality work will include the formula and well formatted explanation of your strategy. The proposal should be two pages in length. |
| Organization and Cohesiveness | 7.5 | 15 | Quality work will be clearly organized to show your progress through the formula which will provide a cohesive transition to a well-organized appropriate solution. |
| Editing | 5 | 10 | Quality work will be free of any spelling, punctuation, or grammatical errors. Sentences and paragraphs will be clear, concise, and factually correct. |
| Content | 35 | 70 | Quality work will demonstrate an understanding of the breakeven analysis concept and will show correct calculations. Conclusions from the breakeven analysis should be summarized with your rationale for the solution(s) that you selected. The content presented must demonstrate an understanding of the material. |
| Total | 50 | 100 | A quality paper will meet or exceed all of the above requirements. |
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